InvestMacro FX

By James McKee

138 banks seized this year in the United States signals a still-dismal outlook for the upcoming fiscal year. With all the effort made to stabilize the economy the banks are still failing and being seized by the FDIC that then has to cover any losses a bank customer sustains over $100,000.00 assuming the bank is insured. Smaller banks are especially at risk due to their lower holdings and overall lack of outside support. While not as crucial to the overall economy as larger banks smaller community based banks offer specialized services to their customers and are more likely to support small business.

Small businesses in America are suffering more at the moment than in any time in history since the great depression, by allowing these small banks to fold we are encouraging further damage to small businesses. As this happens the value of US currency would of course drop as well. I would also like to point out that as small businesses and small banks fold their property and market share is consumed by larger entities, once these entities have a monopoly prices will rise exponentially. The supposed goal of capitalism is to foster the ability for anyone to be able to pursue their dreams if they work hard and play by the rules.

It is the goodwill of other people and businesses that enable those suffering through hard times to persevere. It is this ideal that has enabled many businesses to survive in the United States. By allowing these support systems to collapse we are encouraging a very dark time for the United States and its currency. As traders we should look upon the upcoming G20 summit and the results therein as encouraging because any change is good change, however I think everyone would breathe a sigh of relief if the little guy could win once in a while, I know I would. Happy trading.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

By John M Bland

Those who have followed me over the years know the importance I place on “big figures” (otherwise referred to as “round numbers”) in forex trading. There is a technical, fundamental and psychological component to big figures that make them significant. While this isn’t always quantifiable, pivotal big figures are often the ones that drive expectations and currency forecasts.

What is a big figure in forex trading? A big figure (or “round number”) is a forex rate that ends in 00, such as x.xx00 or xx.00. Examples are EUR/USD 1.3400, 1.3500, 1.3600, etc and USD/JPY 89.00, 90.00, 91.00, etc. Market convention is to drop the 00 and refer to big figures without them, such as EUR/USD 1.34, 1.35, 1.36 or USD/JPY 89, 90, 91.

Not all big figures should be treated the same. Some big figures have more significance than others in forex trading. I refer to these as pivotal big figures, which are ones that end in 2, 5, 8 and 0. For example, EUR/USD 1.32, 1.35, 1.38 and 1.40 are more significant than EUR/USD 1.31, 1.33, 1.34, 1.36, 1.37 and 1.39. The pivotal big figures ending in 0 and 5 are most significant. The way I look at it, if a pivotal big figure is broken, the risk is for the next round number as long as it trades below it. For example, if EUR/USD 1.40 is broken, next target would be 1.38. If that level is broken, I then divide the 1.35-1.38 range in half and use 1.3650 as the next target with the broader risk for 1.35. Note these are not support or resistance levels so I give leeway around pivotal big figures and look for whether they are established as support or resistance.

There are several reasons why pivotal big figures are important:

1) Psychological – There is a strong psychological component to pivotal big figures. This is hard to quantify but there is clearly an emotional impact. Think about your trading and how your sentiment changes when a big figure ending in 2, 5, 8 or 0 is firmly broken or holds. As an example in the current market, the EUR/USD failure at 1.38 (correction high was 1.3790) was followed by 1.35 coming under attack. This pivotal big figure was briefly broken (low of 1.3444) but so far not conclusively as EUR/USD has been unable to stay below it. A firm 1.35 break would raise a risk for 1.32 and 1.30 while a move back above 1.38 would put 1.40 in play again. In another example, a recent failure above USD/JPY 92 has seen the upside stall and 90 subsequently tested. Note, the use of pivotal big figures is just one tool and should be used in conjunction with other tools and indicators that make up your analysis.

2) Options Barriers – Options barriers are often placed at big figures and this often leads to talk of a defense of these levels. When a barrier is at a pivotal big figure it often has a bigger attraction as stops are also often placed at those levels. I am not sure why anyone would use a big figure as an options strike but this is often the case. A discussion of options and the impact on spot forex trading will be left to a future article. The point here is that options strikes are often set at big figures.

3) 10 Big Figure Ranges – Central bank and finance officials often talk in terms of 10 big figure ranges. This is especially true in USD/JPY and in the EUR/USD as well. These ranges usually start and end with a 0 or 5, such as USD/JPY 85-95, 90-100, 95-105. This may be a reason why pivotal big figures ending in 0 and 5 have taken on more significance over the years. In the years when central banks were more openly interventionist, the market assumed a defense of these ranges and often put this to a test. In the current market, the Swiss National Bank (SNB) openly defended EUR/CHF 1.50 (pivotal big figure) as the bottom of the range for many months. The SNB then abandoned a defense of this level and this saw EUR/CHF drop below it. The market is now focused on 1.45 (another pivotal big figure) as the next line of defense and the SNB appears to be currently defending 1.46 to prevent a run at 1.45.

4) Stops – Despite big figures being obvious targets for the market, there are still traders who place stops at or just above/below these levels. This is an invitation to getting stopped out of a position as these round numbers can be like waving a red flag at a charging bull. We refer to stops as JUBBS, which are stops at obvious levels. For a description of a JUBBS stop, visit the Global-View.com website and search under JUBBS. Sometimes the market feels compelled to test big figures, especially pivotal ones, to see if there are stops or bid/offers at these levels.

5) Congestion Around Pivotal Big Figures – Sometimes congestion around a pivotal big figure will take place as the market battles in a tug-of-war to establish on one side or the other. This often sees a narrowing range as the market trades on both sides of a pivotal big figure each day. Those on GVI Forex have seen me point out these patterns when a big figure, especially a pivotal one, prints each day. This offers a chance to trade on both sides as long as this pattern persists. However, the longer this pattern goes on, the more momentum is drained from the market and the greater the risk of a directional move once this pattern is broken.

To sum up, pivotal big figures can be a useful tool for forex trading. Pivotal big figures can be a good guide to the market bias and to potential targets. Central banks and financial officials often think in terms of round number ranges and this helps guide market expectations as well. The use of pivotal big figures can offer trading opportunities during periods of congestion and then signal directional moves when the pattern is broken. Whatever the case, it pays to be aware of pivotal big figures and the ways it can impact trading.

About The Author

By Justin Thomas

A currency transfer depends on exchange rates and you must yourself be a currency expert or consult a professional to choose the right timing and the right currency

Today”s currency exchange rates are driven by a set of complex factors, which require expert knowledge and a lot of practice for one to able to forecast how they will be fluctuating in the short and/or long run. Every college student in finance knows that the exchange rate represents how a particular currency is quoted against a foreign national counterpart. However, not many realise that in fact the exchange rate is a price; moreover, it is the most volatile price on the market. If your everyday day work does not require watching exchange rate fluctuations closely, taking decisions in seconds, or if you lack financial expertise, you should better consult a currency exchange expert before deciding on the rate for your currency transfer.

Here is an example: if you don”??t know what the difference between nominal and real exchange rates is, you have little chance to get a favourable exchange rate by applying your own skills alone. Banks, non-banking institutions and brokers are the players who know the “??Forex market,”?? which is the market where all currency exchange fluctuations happen and where the nominal exchange rates are established. To play successfully on these markets, one should have profound knowledge and be on the constant watch of the ever changing economic and financial data like the level of exports, imports, trade balance, etc., of a particular country to determine if its national currency will gain in strength or will fall.

Interest rate on government bonds and securities is another factor involved in currency exchange rates and in the cost of a currency transfer, respectively. Add inflation, the “??one price law”?? (which states that the price of a certain good should be the same everywhere in the world) and multiply it by sometimes absolutely unpredictable market behaviour and you will get an idea how complicated the Forex market is.

A currency exchange expert will also take into account the political situation in the country and the current economic situation. A good currency transfer company can make you benefit from expected currency exchange fluctuations even if your home or destination currency is weak at the moment. Choosing the right date, even the right hour, to transfer money can be crucial to get an advantageous exchange rate when transferring money from one currency into another, or abroad. But you have to be very familiar with the currency fluctuations at the moment.

Did you know that on 3 August 2010 the British pound reached a five-month minimum against the U.S. dollar? Currency exchange professionals knew this would happen even before the news hit newspaper headlines because that is what they do for a living. What is important for a person who wants to conduct a currency transfer is that these experts know in advance when a particular transaction in two particular currencies must be executed. Thus, one can make a profit even in a situation when some fundamental factors are against him by conducting a currency transfer just on time.

By Andrew Daigle

Many a forex trader has proclaimed the foreign exchange market as ‘volatile’, especially after a large unexpected movement in the currency exchange rate. However, volatility doesn’t necessarily mean random, just that it is difficult to predict. Free of any forex indicators this is true, but with the help of trendlines you can navigate the uncertain waters of the forex market with relative ease. Simply put, trendlines are used to show the general direction and speed of the currency exchange rate.

The key to success in the foreign exchange market is learning how to identify market trends and act on them. Finding a trend and exploiting it over several hours, days, or weeks can create a financial return that satisfies even the most ambitious forex trader. Regardless of what forex trading strategy you use, mapping trendlines will help you exploit trends for maximum profit. Whether its stop loss limits, buy and hold high, or great and small thematic investing, trendlines can be a forex trader’s best friend.

The most important aspect of relying on trendlines in the currency exchange market is following the trend. Under no circumstances should you fight, or trade in the opposite direction of the trend. A common mistake made by newcomers to the forex market, is to trade in the wrong direction, which can lead to an unfortunate loss. Following trendlines, is just as important as using them. Stay away from any forex trading strategy that doesn’t require software that utilizes trendlines, because it can be the difference between trading tomorrow and going broke today.

For an inexperienced trader, trendlines provide a quick and easy illustration of when to buy or sell shares. If you’re looking for a low risk start to your career on the foreign exchange market, get acquainted with identifying and understanding trendlines. When dealing with potentially large sums of money, trendlines allow the currency trader to base his decisions on technical analysis, not just emotions like fear and anxiety. Success in the forex market depends on good decision-making, and trendlines allow your decisions to be analytical and accurate.

Identifying what the trend lines are telling you is the second most important step for any forex trading strategy. An uptrend illustrates the movement of a currency exchange rate when the overall direction is going up. This lets you know that the demand for your currency is greater than the supply, giving you a unique opportunity for financial gain. Officially, an uptrend occurs when each peak and trough is higher than those identified in earlier trendlines. Your goal is to exploit a strong uptrend until signs arise that it is about to reverse.

Just as important as identifying an uptrend, so too is recognizing a downtrend. A downtrend occurs when each peak is lower than the ones found in an earlier trend, which means that more people are selling a currency than are buying it. However, when a forex trader notices that an exchange rate is heading toward a downtrend, it is his duty to be cautious about entering any new positions that could adversely affect current investments.

About the Author

Andrew Daigle owns many successful websites including ForexBoost , a free Forex educational site to learn Forex trading strategies and also endorses Supraforex as one of the best automated trading systems.

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By James McKee

Due to economic upheaval and the expiration of a government tax credit the price of homes has fallen to epic lows recently. While this is great news for investors looking to purchase real estate while the price is right ultimately it is a sign that banks are experiencing a tremendous deal of pressure. This pressure has resulted in an increased (almost desperate) desire to sell property as quickly as possible. While home prices are falling most Americans do not find them selves in a position to purchase property at the moment due to economic difficulty.

In an effort to bait potential homeowners into a purchasing mindset banks have lowered prices on foreclosed properties. Whether this tactic will prove fruitful or not is anyone’s guess, but I would guess that in light of all the mortgage controversy lately your average potential homeowner will keep their distance. Loans that were “robo-signed”, and countless other calamities are at the front of many people’s minds right now and they are anything but interested in participating in such a flawed system. When you have judges coming out of retirement to handle civil litigation that is mortgage-specific you know there is a problem.

A home is a very significant investment for so many reasons, and the fact that banks have erred so severely where people’s entire livelihoods are concerned is flat-out unforgivable. Bearing this in mind it is no surprise that people extremely hesitant to enter into a contract with a bank at the moment. If this strategy does not prove successful it could spell out serious trouble for not only banks in America but the USD as well. Falling home prices are a sign of desperation on the part of the banks and if this strategy does not yield gains confidence in the banks is sure to fall further.

The single largest cause for the United States current economic debacle is the faulty home loans that were pushed on to consumers. This has lead to a complete lack of trust and confidence in the banks on behalf of the public. If consumer confidence in banks and lending institutions continues to erode so will the value of the US Dollar.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

Happy Halloween FX fiends, I mean friends! Indeed, it is very scary at least for the USD as it is now trading at a new historical low versus the Japanese yen. To end the week, the USDJPY surpassed its former all-time low at 80.43 which it set way back in April 1995 and closed at 80.38. As you can see from its weekly chart, the pair has been on a long term downtrend since the latter part of 2007. Based on the Elliot Wave Principle, where prices move in a 5-wave cycle before correcting, the USDJPY pair could be on the final leg of its wave B. If my wave counting is correct, then the pair could rebound for awhile in the coming week or so, marking its wave C, before heading back south to start a new down wave. Given its oversold condition, it could, however, rally until it encounters some resistance at 85.00. Still, the pair would more likely be on track for some more losses because present trend. In any case, a close below its former low at 80.43 at the end of the month would place some more selling pressure on the greenback.

To end the month of October, the US market closed flat with the Dow ending with a mere 0.04% gain and the broader S&P 500 with a 0.04% loss. The US’s third quarter GDP missed its 2.1% target by a hair with a 2.0% growth. Despite the 2.6% increase in household spending, the country’s overall expansion remains subdued and it expected to be the same at least in the near term which brings the country at the realm of another non-traditional monetary easing by the Federal Reserve.

Speaking of the Fed, it will have its monetary easing meeting this coming Wednesday (November 3). The Fed is widely expected to pump more money in the country’s financial system to support consumer spending. Traders will also be on the look out for the US’s non-farm employment report (NFP) on November 5. US firms are expected to have added about 65,000 jobs during the recent month after cutting 95,000 during the previous period. Both expected results from the upcoming two major economic would be bearish for the greenback. An additional easing by the Fed would dilute the USD while the latter would spark some risk taking among investors. Risk taking, as we have been observing during these periods, would go against the dollar given its low interest rate. Nonetheless, expect some fireworks both in the financial market for the coming week. Stay on your toes!

More on LaidTrades.com …

By Taro Hideyoshi

In addition to indicators; such as Moving Average (MA), Relative Strength Index (RSI) or Moving Average Convergence / Divergence (MACD) that traders can add to the price chart to help them in technical analysis. The price chart itself can help traders in market trend prediction.

When analyzing the price, traders may look for a reversal pattern. The reversal patterns indicate a change or trend reversal is about to occur.

I’m quite sure that you have heard the most well-known reversal patterns as double top, double bottom, head and shoulders, reverse head and shoulders. They are basic reversal patterns that traders should get started with before go further to more advances.

Therefore in this article, we will discuss and review the key points the most basic and popular patterns, double top and double bottom.

Double Top

Double top happens when price is in an uptrend. The price goes up and pulls back. Then it resumes the uptrend but when it reaches the resistance established by the first peak. Traders refuse to pay higher prices. Therefore the price starts retracing to previous low.

The key points:

– It looks like an “M” when it’s completely form
– It indicates that bear is coming
– If the price forms the double top pattern and falls below consolidation support, it will sink lower.
– If you are holding a long position when the price is approaching the second peak in an uptrend, keep monitoring and get ready to take profits when other indicators confirm the reversal.

Double Bottom

Double bottom is the upside down version of double top. The price goes down and bounces during a down trend. Then the price resumes the downtrend but when it reaches the support established by the first sink. Traders refuse to sell lower prices. Therefore the price starts to retrace to its previous high.

The key points:

– It looks like a “W” when it’s completely form
– It indicates that bull is coming
– If the price forms the double bottom pattern and penetrate thorough consolidation resistance, it will rise higher.
– If you are holding a short position when the price is approaching the second bottom in a downtrend, keep monitoring and get ready to take profits when other signals confirm the reversal.

Whatever the time frame you trade, you can always spot the patterns. The reversal patterns (also continuation patterns) show up in chart of every time frame.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.

By Daniel Shaw

One of the most important ways to save humanity in extreme situations is a stable economy, which helps to eliminate hunger, protect people and cope with disasters. But money is not very resistant to all kinds of changes. It is related to the market system that allows them to drop or increase in price.

Sometimes we notice that prices for different products rise from time to time. The reason is not because they become more expensive, it is because the money itself worth less. An economy where money supply is not tired to gold, faces inflation. If the currency of the country is pegged to the gold stocks so the crisis is virtually invisible and the national currency is stable to fluctuations.

Looking at the prices on gold during the last years you can see that they are changing all the time. Though it is not the price of gold that is changing, it is the price of money against gold moves up and down. Virtually the gold price remains stable for many centuries though the quantity of money you need to buy gold changes from time to time.

Historically it started a long time ago when gold was used as money. The money was made of gold and other precious metals like silver. But it was a time of completely different money and economy. With the development of civilization, the world’s economy and money has changed too, though the gold value still stayed the same.

You may ask why there are so many cases of countries bankruptcy, inflation and economical crisis if the quantity of existing money is equal to the gold. The reason is that the world economists wish to raise the value of the money and the ways they used to do so cause all kinds of economical disasters where common people suffer. Instead of stabilizing the economic situation of the country by increasing the gold stocks, economists choose the path of inflation releasing more money. As a result all becomes expensive and people don’t have enough money to buy things. Money depreciates more and more and all this leads to poverty and chaos.

Currently there is so much money in the world, that it is impossible to equate it to the rate of gold, because it would increase the price of gold in a million times. For that reason such actions as inflation is necessary to do in order to keep the stability of the world economy.

The appearance of electronic money changed the situation. Banks have a lot of virtual accounts that are not secured by any gold reserve. So we can say that the present price of gold has being deliberately significantly diminished.

Gold is one of the most traded commodities in Forex market. Silver and Oil are popular too but their volumes are much lower. There are also many other commodities like Platinum, Rice, etc offered for trading by many brokers. Trading commodities is much different than currencies. Commodities market is more volatile and usually has higher spreads that requires any trader be more careful in building his trading strategy.

About the Author

Daniel Shaw is a Forex Trading professional. Visit his site Singapore FX to get more useful information and tips on how to trade Forex in Singapore.

By James McKee

When approaching the Forex market you must determine you risk level. After you have set aside proper funds and learned enough on a demo account to be comfortable trading you must determine what type of losses you can take. Losses are a fact of life when it comes to any sort of investment and Forex is no different. While a skilled trader will have his profits outweigh his losses, losses are still going to occur. Having the necessary capital in place to absorb those losses is important not only in keeping your account healthy but also in keeping your mind from being infected with anxiety.

Risk is anything that might negatively impact your bottom line and bearing that in mind one should always assess their risk carefully and accurately. A risk can be divided into two basic types with regard to Forex: Systematic and Unsystematic risk. Systematic risk is that which refers a large-scale change that affects multiple currencies. An unsystematic risk is one that affects a specific currency pair through a local economic problem such as supply shortage. The best way to guard against unsystematic risk is to spread your investments across more than one pair.

Default Risk refers to the risk you take by trusting your money with a particular broker, choosing one that is stable is very important to protecting your investment. Forex risk refers to knowing which events will effect the value of the currency you are trading, even if it occurs in a country different than the one whose currency you are trading. Interest rate risk refers to the chance that a hike in interest rates will adversely affect the trade you are involved in. Political or economic risk refers to the chance that a country’s politicians will intervene in regard to the value of their currency for various reasons.

This is a very brief overview of the risks associated with the forex currency exchange (which are numerous). Keeping a level head assessing your own risk on a second-by-second basis is part of what makes a great trader. Happy trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.